Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
And we're back at Essential Dynamics, the show where everything is important. I'm Reed McColm, your erstwhile and occasional host, talking today to mister Derek Hudson of Essential Dynamics and Unconstrained. Derek, how are you?
Derek:I just have to qualify your, your intro there. Not everything is important, but everything we talk about on Essential Dynamics
Reed:is important.
Derek:Yes. Alright. That's right. We we're trying we're trying to create value here for people who listen.
Reed:I appreciate that. Well, Derek, last time we were talking, we were just about halfway through the, seven steps to scaling your business. And we had discussed we discussed the first three steps, which, you can can you, restate for us in a Sure. In a quick time.
Derek:Sure. So the first thing we we wanna do is get really clear about the purpose, what we're trying to accomplish. Because that's what we're gonna scale. We're gonna we we have to we have to be clear on on what value we're adding to the world, I guess. The second thing is we're not that value is not growing as fast as we want, so that means we're stuck.
Derek:So what are what are we stuck on? What's what's the hard problem that we haven't solved yet? What's the negative self reinforcing loop that we can't we can't get out of? And then the third thing is, to be able to step back and to look at your business as a system. A system of a series of steps that creates value.
Derek:There's cause and there's effect. And only by looking at your business as a system are you ever going to able to make it do the same thing only, you know, twice as big or 10 times bigger. You have to take a systems approach to that. So that's as far as we got it, seemed like, doesn't seem like much, but we we chewed on it. And and
Reed:We did. We we we really gave it some thought. But, one of the questions I was I was I I was asking at the last episode, if I recall correctly was, what happens if your business, starts out growing its purpose and, what if it shouldn't be much bigger? The temptation to just keep growing or or have more franchises or, you know, another chicken basket place, down the street, what where we should we stop?
Derek:Well well, I don't know that there's an answer to that question, but, you know, why would you want to scale your business? Well, one of the things that we've been talking about, really, for the first time in our last episode, was, if we're taking a view over the broader economy, policy makers, government leaders, people in economic development, people who are, in member driven organizations like an industry association or chamber of commerce, they want overall economic activity to go up. So there are more jobs, there are more customers, there are more opportunities for people. And and, you know, sort of human nature is that we need growth. We need growth and opportunity, and we need challenges, and we need to accomplish things.
Derek:So that's the case generally. Specifically, the question is, you know, when is when is there too much growth? I think one of the ways to look at that is, let's get to your purpose. So if your purpose is so profound that the world needs more of it, then perhaps you need to continue to grow to some degree. On the other hand, there is no benefit to you, the people you work with, to grow beyond your foundation without building that building it up.
Derek:So to, to overstep your capacity and fall flat on your face, there's no reason for that. And then on an individual basis, I guess, if if business is only part of your life, then you have to look at the other parts of your life and say, how much am I willing to invest in, of my own personal time and attention in this endeavor compared to family or other pursuits. So there's no easy answer, but the question is a fair one for sure.
Reed:What is the fourth step?
Derek:So I'm gonna I'm gonna have to work on the wording of this because I've got two things that I think are the same, but they sound very different. And one of them is challenge your assumptions, and the other is change your mindset. So I think I'm gonna probably end up with mindset. But
Reed:one
Derek:of the, one of the challenges that we have with our mindsets is we have a particular way of looking at things, which saves us a lot of time, because, we've got the, we've got the neural pathways set up that if this is the input, then I know how to calculate the output. And, it saves us a lot of time if we have a routine or a system or a way of viewing things. The problem is if that's not accurate, then that's a really good way to get stuck. And so we are talking about, these examples of negative loops that you get in. And typically, one of the ways you're stuck in a negative loop is it's based on an assumption that's not correct.
Derek:Like, for example, I think we probably can get back to, writing, but for example, if you have a building, you're a landlord of a building and it's a little bit rundown, then the negative loop is it's rundown, so you can't charge as much rent, so you don't have as much cash flow to fix it. And you get in a negative loop, and you're stuck, and you say, I can't. There's nothing I can do. And that business is I mean, it's it's it's gonna it's gonna get worse and worse and worse. But if you can challenge that mindset, and say, what do I need to do, for example, to repair the building in ways that don't cost money, or to increase the attractiveness of the building in ways that don't cost money but will generate revenue, there's a lot of things you could do.
Derek:You could build a community in the building where people, see themselves as part of the building, and now they're doing the landscaping outside and painting, and now it looks better. And your vacancies goes away, and you can charge a little bit more rent, and maybe people then feel a little bit of more of a sense of ownership, so they don't break things as much. So your repair costs go down, and and you can see how a mindset doesn't change the reality, but it addresses the reality in a different way. I think, I think the answer, using this concept, the answer to writer's block, is that you just write. And writer's block is, I'm afraid to write stuff that isn't good.
Derek:Right?
Reed:Yeah. That's sad. That's
Derek:I am going to write something good. And if I can't write something good, I'm going to stare at my screen. And so a way out of writer's block is, I'm gonna write for three hours today.
Reed:Yeah.
Derek:And while I'm sitting at my chair, my fingers will be moving and stuff will be coming out.
Reed:You know, Derek, when I was a child, I, I was somewhat precocious and spoke English very well. I had I could grasp the rules of grammar.
Derek:I remember you correcting me many times. So yes.
Reed:Yes. Yes. Well, you needed to be corrected. Mhmm. But as a result, when it came time to learn French in class, I would not speak it.
Reed:I would write it. I would follow the tests and everything. And I was trying to learn it, but I would not speak it. And why? Because I was afraid of being mocked for saying something wrong, which doesn't happen in English to me.
Derek:Yeah.
Reed:And I I was worried about, well, then I I won't be as smart. And and as a result, since I didn't wouldn't speak it, I'm here today. I I don't speak French very well.
Derek:So the there's an there's an assumption in there built in, that, if I speak French poorly
Reed:Yes.
Derek:It's bad.
Reed:That's right.
Derek:So, therefore, I will not speak French poorly. I will not speak French at all. And, of course, then you will never learn how to speak French.
Reed:And there's that's what's happened. Exactly. And and, I wish I had challenged my assumptions then, but I didn't I thought they were perfectly logical.
Derek:Well and and that's the that's the thing is in the space you're in, once like, if you draw the box around it, I mean, you might have to draw a pretty narrow box, but you can say, in this world, my assumptions reign.
Reed:Yeah.
Derek:And, and so if you want to scale, if you want to get to the next level, if you want to get unstuck, almost a %, you're going to have to change your mindset. So it's not easy to do, but, and I'll talk about that in, in a minute. But the the thing that I find really fun is, is when the mindset changes. Yeah. Sometimes that's all you need.
Reed:Yeah.
Derek:You don't like like, you don't need, like, this massive implementation plan, you don't need a communications plan, and you and you don't need I mean, whatever you need will come, but but the mindset is, that's it.
Reed:Yeah.
Derek:That's the thing that we didn't have. And now we have the mindset and everything. You just look at everything differently, and you don't even have to change that much. So How do
Reed:you know when you need to change your mindset? What if you're like, I you may be a little paranoid now because I'm thinking, I'm I'm in the midst of writing a play for the Fringe, this year. And it as I'm
Derek:So that's the Edmonton Fringe, and it starts August 18, Pulitzer Fcona in Edmonton.
Reed:Yeah. That's correct. Yeah.
Derek:Okay. That's a plug for you, Reid.
Reed:Thank you very much, Derek. I appreciate it. But so I'm I've been invited to write and direct a play for a group of people who wanna do a play, and, and I accepted that. And so I'm I'm delighted to have the opportunity again to write a play, but I'm not sure I've written one so quickly. And I am intimidated by the possibility of it not being as good as my other work, which took lots of agony.
Reed:I'm gonna have to skip the agony to this one. And, and and it that's scary to me. Not that I want the agony, but it just it just seems to be a natural part of my process that I I don't have time for now.
Derek:So well, so so that's, that's another way to, like, change the mindset is to change the box that we put ourselves in. Right?
Reed:Yeah. Sure.
Derek:Yeah. So one thing I would just share about this is that, one of the thrilling parts of my job is when I see someone go through the mindset change in front of me. And, sometimes they actually do, like, explosion Yeah. Actions or there's a pause, and you can just see the gears going. And then after that, they speak about things differently.
Reed:Yeah.
Derek:And it's super cool. So it's not easy to do, but in order to get stuck out of a rut that you're in that's negative and self reinforcing, some assumptions, some part of your mindset has to has to change. And it's hard to imagine that it can, but it can. And and and let's and you should go for it. Okay.
Derek:So can I move on to the next one? Because we're gonna
Reed:Please, please. Buy what's fine.
Derek:We've got a few to cover. Number five is, is now that your mindset is shifted, now what you wanna do is redesign your system to unlock capacity.
Reed:Oh, that's a lot of words.
Derek:Yeah. Capacity is the keyword here.
Reed:Okay.
Derek:So remember we said that you could have, like, this system that was producing at a certain level, and if you wanted to scale up, you went through a step change. So you can't do it the same way and just, like, faster or just more people. There's gotta be a different different approach. And so what you're looking for is capacity in the system, which you can then, sell or apply to new orders or something like that. And so for you to understand capacity, you need to understand where it's limited.
Derek:That's the constraint thing that we always talk about.
Reed:Well, your capacity is limited. That's interesting.
Derek:So your capacity is limited. Where it's most limited, that's your constraint. So the question is, how do I get more capacity? And, let's say, for example, in a manufacturing line, I have a client that's working in manufacturing. They have people in their factory, and they also have machines.
Derek:Sure. And there's a machine that does a lot of work very fast that it would take people a long time to do.
Reed:Okay. No. A machine that works very fast, it would take people a long time.
Derek:It would take it would take people, like, you know, so many so many steps are just done instantly by this this really cool machine.
Reed:Automation. Yes.
Derek:Yeah. The whole thing isn't automated. It's not like one robot factory, but there's this one step, the intro Yeah. The intricate step that sped up significantly by having a machine. At their busy times, that's not enough.
Derek:So they've been running multiple shifts, so they can run the machine longer, they have more people on staff, and they're making more. But they did the calculations, and they can pay for a second machine in about two months.
Reed:Oh. So Does that does that eliminate jobs?
Derek:It doesn't eliminate jobs. It increases capacity.
Reed:Excellent. Now that's an important point.
Derek:Yeah. So then the question people often
Reed:associate automation with evil.
Derek:Yeah. Yeah. So well, you think about automation and how bad it is. The fact that you can buy a computer for $2,000 is largely because the components can be manufactured so quickly and cheaply. And the raw materials ultimately really aren't that expensive.
Derek:Right? Like, so automation provides low cost goods for us. And then, if you're working in a in the context of a factory where that has potential for automation, what you wanna do is find more customers, not less not less jobs. So so that idea of of finding capacity, it's it's kind of a treasure hunt because you find it, then you gotta do something with it. And that's the process of scaling up, is generating capacity and then filling it and generating more capacity.
Derek:And one of the things that, that I think, sort of from looking from the outside, when you wanna scale a company, you don't think about that as much. You think, well, maybe they need to export to Asia, so let's get them ready for a trip to Japan and China, and they can sell their stuff. And the problem is they they don't have capacity to make more. So we have to we have to balance the capacity and the demand. So that's that's the fifth one.
Derek:Now I'm gonna take a real, sideways trip. Because we've been yeah. For number six, we've been talking about process, system, capacity, you know, automation, stuff like that. Number six is you need to earn the hearts and the minds of the people.
Reed:Holy cow. Now we're talking more my area.
Derek:Yeah. So if you're gonna scale, you're gonna ask more of everybody. And there has to be a reason that it's a good idea to do that. And so if you have people that intellectually and emotionally, either identify with the purpose of the organization, the leader of the organization, the customers, then you can get over that hump, do that step change, and scale your business because the people will figure it all out. But if they don't care or if they're feeling that they're being, mistreated, then all this other stuff isn't gonna work.
Reed:It's moot. I like how you put earn at the front of that step, rather than just, change the hearts and minds of the people like like, Stalin wanted to do.
Derek:Well, you can't you cannot change the hearts of people. That's why I use that word. Right?
Reed:Earn it.
Derek:You can you can earn their trust. You can even earn their love. You can earn their respect, but you can only do it by doing something that is worthy of trust or worthy of respect.
Reed:And you can't even go through these six steps. The first the first six we were discussing, you can't even go through them without that, without the trust of your team.
Derek:Well, you you know, you can make a show of it, and you can barge your way through a lot of stuff. But the idea of scaling, if we wanna keep using that term, is that we have adjusted the parameters of our business. So it operates effectively at a at a higher level of capacity, a higher level of production. Right? Yeah.
Derek:And to really do that, you have to scale the contribution of the people. And I don't think that you can buy that, or you can afford to buy that, in a transaction kind of sense, for very long.
Reed:Okay. Okay.
Derek:So So you need the deep go ahead, Reid.
Reed:I was gonna say it's also a difficult step to quantify. How do you know when you have the hearts and minds of people? I suppose you've often referenced seeing somebody's mind change right in front of you and seeing their their their perspectives of their own possibilities expand just as you're discussing with them. That must be a very satisfying thing to to see or witness.
Derek:Well, it it is very cool. And it but if you're talking about an organization, there's another thing that you can see where people come to work because of their their team they're on, because of the customer Sure. And, or this sense of purpose. Now you gotta pay them fairly or, you know, at some point their family's gonna say, I know you love that job, but, you know, we need to go to college someday, dad. So, you know, be there for us.
Reed:Yeah. Yeah. You're telling me the story of my life. Yeah.
Derek:But but there's, there's no shortcut to having the hearts and minds of the people, and there's nothing you can't accomplish once you have them.
Reed:Alright. So what does that leave us? Where's step seven?
Derek:Step seven is okay. I'm gonna review the first six, and then I'll I'll do my steps.
Reed:Then you're gonna then you're gonna Okay. Make step seven a surprise. That's the first one.
Derek:And remember, we're talking to people who are running their own organizations, and we're talking also to people who want to help those people run their organizations better. So the first thing is to be really clear about your purpose and what you're trying to accomplish. Yes. Because you can't scale up something that you can't describe. So we're here to do this thing, and we want to do it bigger.
Derek:We'll tell them, we'll affect more people. So second thing is, now call out where you're stuck. We're we're not moving ahead because we're in a loop that keeps feeding itself and we know we don't get ahead. What is that? What's what's the dilemma?
Derek:What's the thing we don't know how to we don't know how to deal with? The third thing is, now we're gonna step outside and look at the business as a system. There is cause and effect. There's inputs and outputs. We can make assumptions about how things are gonna flow through the system and test them.
Derek:And by doing that, we've got something that we can scale. Because what we're doing is designing the system to operate at a different scale. We're not just fighting fires.
Reed:Okay.
Derek:The fourth thing is to change your mindset. So it's it's to take those, baked in assumptions and limiting things that we think about, way we see the world, and expand them to accommodate the ability to operate at this different level. And then the next thing is is that we need to redesign to unlock capacity. We have to find the capacity in the system. We need then to deploy that capacity to satisfy our demand and and step those two up.
Derek:But we really need to think and understand capacity. And then the sixth thing, which isn't in sequence. Okay? And I and you caught me on that, Reid, so that's a good one. Is all through this whole process, you have to earn the hearts and minds of the people.
Derek:And so that they see themselves in the purpose, they see themselves, in the solution to get unstuck. They're with you with the mindset change. And, and that's gonna make all the differences that people are progressing with you.
Reed:So what is the seventh step?
Derek:The seventh step is this is all very, very hard to do while you're still running a business. So you need to get some outside help. You need somebody who's, gonna let you run your business, respect everything that you're bringing to the table, but have that outside perspective, ideally have a process based on principles, not a prescription, but a way of thinking, including things like these six steps, to be able to apply as a leader of a business into that specific situation. So I think one of the things one of the places where that, we see that breakdown in society, and I'm talking about this, this sort of policy and, economic development level, is that we wanna find the program that we're gonna make the people, because we're gonna fix the companies, just like companies wanna fix their people. But but, but the businesses are unique, and they have a particular challenge at a particular time.
Derek:The government program of the day might not be the thing. And so to have, something that's based on principles, that's based on real cause and effect, is the way to get unstuck and break through to to scale scale a business.
Reed:You know, Derek, I'm sure some people listening and people who know you might recognize that, the seventh step, getting competent outside help. And I have to tell you, if I had a nickel for every time somebody has told me to get help, I I think a lot of people will recognize that that competent outside help is someone like you. And, I wanna thank you for taking the time to formulate and really concentrate as to what these steps should be. Just as with any worthwhile information, you've raised up many more questions for conversation. And I hope you'll, hope you'll all be willing to join us, and as we explore what those steps and the ramifications of them might, might do.
Reed:Now would you please share and follow us on Apple or Spotify or wherever you find your favorite podcast? And please tell your friends about us because we want to scale our business. And, Derek, where can people find you?
Derek:You can reach out to me at getunconstrained.com. And, Reed, thanks very much for your kind words today.
Reed:I appreciate it very much, and, it's an honor. Ladies and gentlemen, until next time, consider your quest.